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In response to critiques of traditional gradings systems in higher education, many faculty have developed alternative grading structures. This paper explores students’ perceptions of a labor-based grading contract. Specifically, we examined students’ psychological need satisfaction, risk taking, interest, and perceptions of the learning environment before and after a class that implemented a labor-based grading contract for a semester-long research project. Paired-samples t-tests identified significant increases in overall need satisfaction, satisfaction for autonomy and competence, preferred difficulty, and perceptions of the learning environment. There were no significant differences in interest or satisfaction of the need for relatedness across the two time points.